Context

Question 1

Natural Monopoly (Inefficient)

Answer 1

Thames Water - Very inefficient, leaked sewage into rivers whilst paying high dividends, £20bn in debt

Question 2

Oligopoly

Answer 2

Supermarket Industry - 5-Firm Concentration Ratio (66%), Tesco’s market share (28.5%)

Question 3

Non-Price Competition

Answer 3

22+ million households in the UK are active members of the Tesco Clubcard loyalty program

Question 4

Negative Externalities (Production)

Answer 4

Carbon dioxide levels in atmosphere reach 800,000 year high

Question 5

Opportunity Cost

Answer 5

UK Government cancelling HS2 will cost £100mn

Question 6

State-Owned Businesses

Answer 6

Network Rail (rail infrastructure management)

British Business Bank (created in Nov 2024 - supporting small/medium sized businesses)

ScotRail (passenger train services in Scotland - nationalised in April 2022)

Scunthorpe Steel

Question 7

Privatised Businesses

Answer 7

Royal Mail (Privatised 2013-2016)

Lloyds Banking Group (bailout in 2008, fully privatised 2017)

Northern Rock (sold to Virgin Money in 2011)

Question 8

Industries where price-capping happens

Answer 8

Energy Price Cap (Set by OFGEM until Oct 2024)

Rail Fares (Certain Tickets) - Regulated fare increase (July = RPI% +1%)

Telecommunications (BT Openreach)

Question 9

Openreach

Answer 9

Quasi-Natural Monopoly
July 2024 - 14,800,000 premises passed, next highest is at 3,400,000 by CityFibre

Question 10

Recent Mergers

Answer 10

Nationwide Building Society Acquired Virgin Money UK (2024)

Aviva Acquired Direct Line Group (2024)

Barrat Homes Acquired Redrow Homes (2024)

Question 11

Barrat Homes

Answer 11

UK’s largest housebuilder, when they acquired Redrow (competitor), it went under scrutiny from the CMA due to potential competition concerns

Question 12

Duopoly

Answer 12

Visa and Mastercard (payment networks)

Shell Recharge and BP Pulse (EV charging)

InPost and Amazon (Parcel lockers)

Question 13

Contestable Markets

Answer 13

Parcel Couriers

Low-cost Airline

Coffee Shops and Cafes

Low-cost gyms

Clothes Retailing

Question 14

Low Cost Gym

Answer 14

PureGym - Nearly 2,000,000 members

Question 15

Maximum Prices

Answer 15

Rent Controls (Scotland) - Introduced rent caps in 2022 to limit increases for existing tenants during cost of living crisis

Cap on University Tuition Fees

Question 16

Minimum Prices

Answer 16

Alcohol - Scotland 65p per unit (2024)

Question 17

Policies to Target Carbon Emissions

Answer 17

UK Emission Trading Scheme

Renewable Energy Support - Contracts for Difference (Government guarantees minimum prices for renewable electricity generation projects

Boiler Upgrade Scheme - Grants for households installing heat pumps and home insulation